COMING NEXT SUNDAY: The News Herald looks at how privatization of school food services has worked

By JESSICA McCARTHY / The News Herald

Published: Saturday, February 16, 2013 at 06:45 PM.

Two other North Florida counties — Duval and Santa Rosa — that have privatized transportation services said saving money is a reason for considering privatization.

Judson Crane, director of purchasing and contract administration for Santa Rosa County, said cost of labor, benefits, supplies and equipment factored into the county’s decision to privatize transportation.

The district has had more than one company contract for transportation services since the beginning, and bus costs still factor into the deal. Durham School Services is the current provider.

“When we first did the transportation contracting 15 years ago, we maintained our fleet and the company at the time provided 25 new buses a year for 10 years,” Crane said. “We still have some district buses — about 30 — and we allow the company to use them, but as the buses leave service we will not be replacing them. All new vehicles will be provided by the contractor.”

He said the decision proved to be a good one for their district, although he said it may not be the answer for all districts.

“It’s worked extremely well; we know we are saving money through studies on district labor versus contractor labor,” Crane said. “Contractor labor comes in at half of what we’d pay if we went back to self-operations. We have well qualified managers in all areas that are experts in their field and the companies behind them to provide things we would never be able to.”

One of those things he said companies, such as Durham School Services, can provide that his district can’t is new job opportunities.

PANAMA CITY — Losing about $4 million a year in transportation costs is behind the exploration into privatization for Bay District Schools.

“We spent $8 million in transportation and generated $3.9 million,” Superintendent Bill Husfelt said. “We’re just way out of whack as far as revenues and expenditures. It’s like energy and everything else with fixed costs. We need to be more efficient, and I think it would be wrong not to look at every option.”

He said the bottom line is money, both the cost of transportation and what else they would prefer doing with the money they do have.

“School buses cost about $100,000 each or more, so we’ve got to come up with the money somewhere,” Husfelt said. “We have like the fifth oldest fleet in the state, and that’s a major concern for us. We’re just trying to be as efficient as we can and put more money in the classrooms. We want to give teachers more money than even the governor is talking about, but we can’t if we keep doing things the way we always have.”

Husfelt presented budget priorities to the School Board on Tuesday, including the plan to upgrade the fleet, affecting the budget between $1 million and $1.5 million each year for the next six to seven years.

Based on bids from five companies that responded to a request for proposals, privatizing would save money. The bids ranged from $5.5 million to $7 million, compared to the $8 million figure Husfelt cited for the district’s annual cost.

Husfelt said the bids are being analyzed by a committee, and no decision has been made whether to privatize. He said once the committee, via John Harrison, general manager of purchasing, contracting and materials management for the district, gives him a recommendation, that’s when a decision will be made on the next step.

“I have to decide to go with the recommendation or not and I have questions that have to be answered,” Husfelt said. “It’s hard not to look at something that can save a million dollars or more; I’d be crazy to not at least consider it. A lot of questions have to be answered and we have to convince the board it’s a good idea, too.”

The district put out a request for proposals (RFP) for transportation last year but opted not to hire any companies. Husfelt said one of the concerns voiced from the community was the bus fleet.

“One of the big concerns the first time we looked at this was what if we don’t like the company but sold the fleet in the deal and can’t afford to start over,” Husfelt said. “This time we wrote the RFP to maintain ownership of the fleet. That’s the big difference between this time and last time.”

He said although their capital revenues continue to shrink, safety will not be ignored.

“We are not going to do anything that would put the children in any kind of danger or questionable situation; parents need to understand that,” Husfelt said. “I just don’t think the parents or community understands how old our bus fleet is. They’re extremely expensive. Our dollars just keep shrinking, so we have to look outside the proverbial box for ways to purchase new buses.”

Other counties

Two other North Florida counties — Duval and Santa Rosa — that have privatized transportation services said saving money is a reason for considering privatization.

Judson Crane, director of purchasing and contract administration for Santa Rosa County, said cost of labor, benefits, supplies and equipment factored into the county’s decision to privatize transportation.

The district has had more than one company contract for transportation services since the beginning, and bus costs still factor into the deal. Durham School Services is the current provider.

“When we first did the transportation contracting 15 years ago, we maintained our fleet and the company at the time provided 25 new buses a year for 10 years,” Crane said. “We still have some district buses — about 30 — and we allow the company to use them, but as the buses leave service we will not be replacing them. All new vehicles will be provided by the contractor.”

He said the decision proved to be a good one for their district, although he said it may not be the answer for all districts.

“It’s worked extremely well; we know we are saving money through studies on district labor versus contractor labor,” Crane said. “Contractor labor comes in at half of what we’d pay if we went back to self-operations. We have well qualified managers in all areas that are experts in their field and the companies behind them to provide things we would never be able to.”

One of those things he said companies, such as Durham School Services, can provide that his district can’t is new job opportunities.

“It provides a career path for the employees,” Crane said. “They can move on, even outside the district and move up. Many of the managers for Durham started as bus drivers.”

Durham is one of the companies that has put in a bid for the Bay District Schools service contract. Crane said they experienced opposition from the public when they started the privatization process, but things have smoothed out.

“With change, folks are going to be concerned and employees worry,” Crane said. “Our district was committed and employees had the option of staying on district payroll. When we started, we weren’t in the financial restraints districts have now. Cost was an issue, but not as bad as it is now. We still deal with issues on a daily basis, but we would do that anyway.

“It’s not a panacea; it still has to be managed by the district, but when done correctly, it can be successful.”

Duval is another school district that has privatized transportation services, but their contracted history began more than 50 years ago. Leslee Russell, transportation director for Duval, said in the beginning of contracted services, the companies were local, smaller companies, but around 2001 they transferred into using larger national companies.

She said the first contract during the transition urged the national companies to hire their local drivers, and a majority of those drivers were hired.

“We have had several companies for transportation. When the contracts end, we rebid pieces of the pie,” Russell said. “We take the routes and divide them into geographic service areas. They bid on some routes instead of all of the service because we are a large county. You don’t have all of your eggs in one basket; if someone defaults, you may be able to count on another company.”

She said having that option gives room to adjust by only needing to make contract amendments to have a route area covered instead of having to rebid an entire area immediately.

“Also, it tends to help them sharpen their pencil because they are competing with each other,” Russell said. “We do all the routing and we contract for the bus and the driver. The drivers are employees of the contractor, and they also purchase the buses.”

Unlike the concerns Husfelt heard about maintaining the fleet in this district, that has never been a concern for Duval.

“We never owned our buses; we had more than 140 small contractors prior to 2001,” Russell said. “The superintendent at the time said we should be doing it differently, more efficiently. The whole system needed a revamp; that’s when we did an RFP.”

She also said cost was a factor in the transition to using national companies. They currently use Durham School Services, Student Transportation of America and the Birnie Bus Company as their transportation providers.

“We knew that we would gain some efficiency just by changing the way we handled our fuel costs,” Russell said. “We were compensating our contractors [prior to 2001] at retail price for fuel per mile. With national contractors, we have fuel contract as well. We have a good fuel price and offer them all the same fuel price. We compensate for the home-to-school miles.”

She said their district was guaranteed to make about $500,000 the first year and break even after that, but the change to national contractors has made quite a bit of profit.

“The district has made quite a lot of money; we went up against the statutory limit on amount of profit and had to make improvements quickly to use some of the surplus,” Russell said.

She also said their district’s transportation department is considered one of the newest in the state, with the average age of buses in use being 3.8 years.

“We have relatively new buses, which means it’s much safer and the newer equipment has more up-to-date safety features,” Russell said. “As with probably any district thinking about it, even though we were private before, it was a cultural change for the county and district. The mom-and-pop companies were living and working here; there was some angst. Districts always think about what happens to those currently doing the work, but it worked itself out. I think the community is pleased.”

She also said having national contractors gives her a sense of safety because this service is what these companies do all over the country with thousands and thousands of buses and students.

“They know what they’re doing and they’re concerned about customer service,” Russell said. “They work as team here. We’re not just customers; we’re partners. That has gone very well for the last 10 years, having national companies here to work with us.”

The bids

Here are bids for the first year of service from the five companies vying to run Bay District transportation services:

NOTE: Clicking on hashtags in this stream may result in seeing adult material, such as photos or foul language, that appear elsewhere on Twitter. We do not endorse such material, but we do not have control over what items can be found in hashtag searches.